New Straits Times - Jun 12 5:54 PM KUALA LUMPUR - Malaysia, the world’slargest producer and exporter of palm oil, is developing its own bio-fuelpolicy to further strengthen and brighten the industry’s outlook.

"The Government has given its support and we feel that for bio-fuel toevolve properly here, we must have a very comprehensive policy," Tan SriYusof Basiron, director-general of the Malaysian Palm Oil Board (MPOB)said in an interview.

The proposal for the policy is expected to be tabled at a Cabinet meetingthis week.

The board, which is spearheading research into the policy, is looking intodevelopments in other countries where bio-fuel has been accepted.

America, Brazil and Europe are making use of corn, sugar cane and rapeseedfor bio-fuel as this helps stabilise prices of these commodities as wellas increase their demand.

Yusof pointed out that while prices of most commodities had stabilised,palm oil was still subject to price pressures.

Palm oil earns the country RM31 billion annually and there is room todiversify its uses and make inroads into the growing bio-fuel industry,estimated to have grown to 2.5 million tonnes.

"If bio-fuel is successful, then the palm oil industry will be in a muchbetter position as it would be truly diversified in biomass,oleochemicals, fuel and food products," Yusof said.

The industry also hopes to benefit from the present high fuel prices.

"We have identified specific strategies to ensure that the introduction ofbio-diesel is painless so that the public will support it."

He stressed that the strategy is not only to introduce bio-diesel locallybut also for export as there is interest from abroad.

The board has a small plant producing 3,000 tonnes of palm-based dieseland there are already takers among Europe’s train operators.

The overseas market, which is used to soya-based or rapeseed bio-fuel, isbeginning to consider palm oil as an alternative.

"They see palm oil as the next best alternative with a large supply. It’salso cheaper than rapeseed.

"So they are already burning palm oil in Europe. Some say up to half amillion tonnes are burnt in power plants and they derive benefits due toEurope’s renewable fuel policy.

"The demand looks strong, prompting us to set up the RM40 millionbio-diesel plant in Labu, Negri Sembilan. This is a joint venture withGolden Hope Plantations Bhd."

Apart from the palm diesel technology, the plant has also developed thetechnology to produce winter-fuel grade — palm oil fuel from methyl esterwhich will not freeze in cold temperatures. Yusof said this was a worldfirst.

He said Malaysia also hoped to be known as an exporter of technology.

And whether importing countries use bio-fuel made in a Malaysian-builtplant or produce their own, it will be a win-win situation as the morepeople convert our palm oil into bio-fuel, the higher the price will be.